Smgr corp presentation feb 2014

Together We Build a Better Future 0


INDONESIA’S CEMENT INDUSTRY: NOW and THE FUTURE SMGR Corporate Presentation

FEBRUARY 2014

Together We Build a Better Future

2

1. SEMEN INDONESIA 29.5 mn ton - Semen Padang : 7.3 mn ton - Semen Gresik : 14.4 mn ton - Semen Tonasa : 7.8 mn ton 2. Semen Andalas 2) 1.6 mn ton 3. Semen Baturaja 1.3 mn ton 4. Indocement TP 20.5 mn ton 5. Holcim Indonesia 12.1 mn ton 6. Semen Bosowa 6.0 mn ton 7. Semen Kupang 0.5 mn ton TOTAL 71.5 mn ton

• Design Capacity : 68.0 mio tons 71.5 mio tons 82.2 mio tons • Production Capacity : 55.2 mio tons 60.0 mio tons 69.8 mio tons • Domestic Growth : 5.5% 6.0% 6.0% • Domestic Utilization : 99% 99% 95% •Supply Domestic : 58.0 mio tons 61.0 mio tons 65.8 mio tons Export : 0.5 mio tons 0.5 mio tons 0.5 mio tons Import : 3.3 mio tons2) 3.0 mio tons 3) 3.0 mio tons3)

1) Based on the Company’s forecast 2) Imported cement by PT Semen Andalas (1.0 mio ton) and clinker by Bosawa and Kupang 3) Imported cement & clinker

Singapore

Kuala Lumpur

SMGR

2

1

3

4 5

1

1

6 7

DOMESTIC CAPACITY (2014) CEMENT INDUSTRY 2013 2014F 1) 2015F 1)

CEMENT INDUSTRY AT A GLANCE

2


‘000 tons

ton(‘000) 2013 2014F 2015F 2016F 2017F

Installed Capacity 68,000 71,500 82,200 97,800 100,800 Real Production 55,200 62,205 69,870 78,240 85,680 Consumption 58,580 62,095 65,820 69,770 73,956 Surplus/(deficit) -3,380 110 4,050 8,470 11,724 Domestic Utilization 100% 100% 94% 89% 86% Export 500 500 500 500 500 Domestic Consumption Growth 5.5% 6% 6% 6% 6%

3

DOMESTIC DEMAND VS NATIONAL CAPACITY (2013 – 2017)

0

20.000

40.000

60.000

80.000

100.000

120.000

2013 2014F 2015F 2016F 2017F

Design Capacity Real Production Consumption Cement


Source: Deutsche, Indonesia Cement Association

229

kg

0

200

400

600

800

1,000

1,200

1,400

1,600

1,800

2,000

ChinaSingapore

Vietnam

Thailand

Indonesia

Philippines

India

kg/capita

COMPARISON: CEMENT CONSUMPTION PER CAPITA 2013


Source: Indonesian Cement Association & BPS Statistic

Growth:

1.1%

Growth:

9.7%

Growth:

4.2%

Growth:

1.8%

Growth:

6.6%

Growth:

5.8%

Growth:

19.4%

Domestic consumption (LHS) GDP growth % (RHS)

(mio tons)

40.8

48.0

54.958.0

4.6

39.1

27.2 27.530.2 31.5 32.1

34.2

38.1

6.10% 6.00%

5.70%

6.80%5.6%

4.7%

5.1%5.4%

4.4%

6.3%

6.1% 4.60%

6.50%

5.5%

14.5%

6.0%

11.5%

4.2%

9.7%

2.5%

6.6%

1.8%1.1%

5.8%

17.7%

0.0

10.0

20.0

30.0

40.0

50.0

60.0

2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 1M2014

0.0%

10.0%

20.0%Cement growth % (RHS)

(A)

5

INDONESIA’S SOLID ECONOMIC AND DOMESTIC CEMENT CONSUMPTION GROWTH

-0.2%


21.0

6.5

18.1

1.0

16.9

1.9

20.0

2.3

22.7

3.0

23.7

3.5

23.7

3.8

25.2

5.0

25.5

6.0

26.9

5.1

28.2

6.0

32.2

5.9

32.8

6.2

34.2

6.6

39.2

8.8

44.1

10.8

45.7

12.2

3.6

0.90

5

10

15

20

25

30

35

40

45

1997 1999 2001 2003 2005 2007 2009 2011 2013

Bagged Cement Bulk Cement

Bag and Bulk cement consumption (million tons)

6 Source: Indonesia Cement Association and the Company’s data

SO FAR INFRASTRUCTURE EXPANSION RELATIVELY SLOW


Retail (residential) sector is the largest consumer of cement in Indonesia

7

Bag79%

Bulk21%

Key Drivers of Domestic cement demand: • National Economic Growth • Favorable Interest Rate Environment • Infrastructure Expansion

• Per Capita Consumption increase from current low levels

• Ready-mix (infrastructure): ± 60%

• Fabricator (pre-cast, fiber cement, cement based industry): ± 35%

• Projects (mortar, render): ± 5%

• Housing: ± 90%

• Cement based industry: ± 10% ±

±

Source: Internal Research

DOMESTIC MARKET CONSUMPTION (2013)


MARKET UPDATE SMGR Corporate Presentation

FEBRUARY 2014


Papua

Bali & N T

Sulawesi

Kalimantan

Population Distribution (2012)

Sumatera 21.3% Java

57.5.%

8.4%

5.8%

5.5% 1.5%

9

REGION MARKET SHARE (%)

SMGR INTP SMCB BSWA ANDLS BTRJA KPG

1. JAVA 41.7 37.8 18.5 2.0 - - -

2. SUMATERA 44.4 13.9 13.0 3.0 16.0 10.0 -

3. KALIMANTAN 43.6 34.7 12.2 9.0 - - -

4. SULAWESI 59.0 17.1 1.3 23.0 - - -

5. NUSA TENGGR. 41.3 31.8 3.8 17.1 - - 6.0

6. EASTERN IND. 59.2 16.3 0.6 23.8 - -

TOTAL INDONESIA

44.0 29.9 14.3 5.6 3.4 2.1 0.3

SG

SP

ST 1

2 3 4

5

6

22.0%

8.1% 7.5%

5.5 1.9%

Java 54.9%

Sumatera

Cement Distribution (1M2014)

Domestic Market Share (1M2014)

MARKET BY GEOGRAPHY

Together We Build a Better Future *) Source: Indonesia Cement Association, un-audited figures 10

AREA 1M 2014 1M 2013 CHANGE (%)

Jakarta 410,452

423,150

(3.0)

Banten 233,769

300,383

(22.2)

West Java 706,800

655,042

7.9

Central Java 498,328

545,375

(8.6)

Yogyakarta 82,713

83,223

(0.6)

East Java 616,914

593,256

4.0

Total Java 2,548,976

2,600,429

(2.0)

Sumatera 1,021,724

1,031,750

(1.0)

Kalimantan 374,557

349,559

7.2

Sulawesi 348,548

286,775

21.5

Nusa Tenggara 256,794

270,774

(5.2)

Maluku & Papua 88,450

109,321

(19.1)

TOTAL INDONESIA

4,639,049

4,648,607

(0.2)

Export Cement 3,755

6,189

(39.3)

Export Clinker -

-

-

Total Export 3,755

6,189

(39.3)

GRAND TOTAL 4,642,804

4,654,796

(0.3)

1M 2014 – Domestic Consumption (mio tons)

DESCRIPTION 1M-14 1M-13 CHANGE (%)

DOMESTIC 2,045,347

2,040,930

0.2

Semen Indonesia 1,092,575

1,068,681

2.2

Semen Padang 568,079

609,252

(6.8)

Semen Tonasa 384,693

362,997

6.0

EXPORT 3,755

6,189

(39.3)

GRAND TOTAL 2,049,102

2,047,119

0.1

Industry Sales Type (mio tons)

1M-14 1M-13 YoY Change

Bag 3.69 (79.3%) 3.70 (79.7%) (0.4%)

Bulk 0.96 (20.7%) 0.94 (20.3%) 2.5%

1M 2014 - SMGR Sales Volume (million tons)

MARKET UPDATE - Cement Consumption 1M2014

SMGR Sales Type (mio tons)

1M-14 1M-13 YoY Change

Bag 1.54 (75.5%) 1.59 (78.2%) (3.2%)

Bulk 0.50 (24.5%) 0.44 (21.8%) 12.6%


COMPANY PROFILE SMGR Corporate Presentation

FEBRUARY 2014


1957 : Inauguration of Gresik I, installed capacity of 250,000 ton cement per annum 1991 : Initial Public Offering, Market Cap.: IDR0.63tn, resulting shareholding structure post IPO: ● Government of Republic of Indonesia: 73% ● Public: 27% 1995 : Acquisition of PT Semen Padang (Persero) and PT Semen Tonasa (Persero) 1998 : Cemex became a strategic partner, Market Cap.: IDR4.9tn 2006 : Blue Valley Holdings bought Cemex’s 24.9% stake in SMGR, Market Cap.: IDR21.5tn 2010 : In March 31, Blue Valley Holdings sold all of its stake ownership in SMGR, Market Cap per April 30, 2010: IDR72.1tn 2011 : Total installed capacity of 20.00mm tons, Market Cap per June 29, 2012: IDR67.0tn 2012 : Acquisition of Thang Long Cement Vietnam, Total installed capacity of 2.3mm tons, Market Cap Dec 19th, 2012: IDR91.9tn

BRIEF HISTORY

0.0

5.0

10.0

15.0

20.0

25.0

30.0

1957 -1970 -

1980 -1984

19851986 -

1990 -1995

19971998 -

20062007

20082009

20102011

2012

SMGR CAPACITY BUILD-OUT (MM TONS)

Pre-consolidated capacity

Post-consolidated capacity Installed capacity: 25.3 mio tons (2012)

including TLCC

_ _ _ _ _ _

SMGR IS THE #1 CEMENT COMPANY IN INDONESIA

Presenter

Presentation Notes

Create a new sect5ion before management team section and put this slide there.


Public The Government of the Republic of Indonesia

PT Semen Indonesia (Persero) Tbk.

PT Semen Padang PT Semen Tonasa

OWNERSHIP STRUCTURE1

¹ As of Dec 18, 2012

51.01% 48.99%

99.99% 99.99%

Name Activities % Ownership

1. Igasar Cement distribution & Trading 12.00%

2. Sepatim B General trading, cement packaging 85.00%

3. Bima SA General trading, cement packaging 80.00%

4. SUPS Cement Packaging 10.00%


1. UTSG Limestone & Clay Mining 55.00%

2. IKSG Cement Packaging 60.00%

3. KIG Industrial Estate 65.00%

4. Swadaya Gra Steel fabrication, contractor 25.00%

5. Varia Usaha Transport and general trading 24.90%

6. Eternit Gresik Building materials 17.60%

7. SGG Prima Coal Trading Coal 99.99%

8. SGG Prima Beton Ready Mix Concrete 99.99%

Thang Long Cement, VN

70.00%


1. UTSG Limestone & Clay Mining 55.00%

2. IKSG Packaging Paper 60.00%

3. KIG Industrial Estate 65.00%

4. Swadaya Graha Contractor & Machine Fabricator 25.00%

5. Varia Usaha Transport and general trading 24.90%

6. Eternit Gresik Building materials 17.60%

7. SGG Energy Prima Coal Mining and Trading 97.00%

8. SGG Prima Beton Ready Mix Concrete 99.99%

FOCUSES IN CORE BUSINESS

Presenter

Presentation Notes

Create a new sect5ion before management team section and put this slide there.

Competitiveness of Semen Indonesia Integrated Cement Plant 4 location

Kiln 13 Unit

Cement Mill 22 Unit

Grinding Plant 2 location

Cement Mill 4 Unit

Warehouse 30 location

Packing Plant 21 location

Sea Port 11 location

Kiln 1 unit

Cement Mill 1 unit

Kiln 4 unit

Cement Mill 6 unit

Kiln 4 unit

Cement Mill 9 unit

Grinding Plant

1 unit Cement Mill

Kiln 4 unit

Cement Mill 6 unit Grinding

Plant 3 unit Cement Mill


FINANCIAL UPDATE SMGR Corporate Presentation

FEBRUARY 2014


EBITDA (Rp billion)

NET INCOME (Rp billion)

EBITDA Margin (%)

FY07 FY08 FY09 FY10 FY11 FY12

29.7 31.7 33.2 34.6 33.0 35.0

NET INCOME Margin (%) FY07 FY08 FY09 FY10 FY11 FY12

18.5 20.7 23.1 25.3 24.0 24.7

Description (Rp bn)

FY 2011 FY 2012 Change (%)

Net Revenue 16,379 19,598 19.7

Cost of Revenue 8,892 10,300 15.8

Gross Profit 7,487 9,297 24.2

Operating Expenses 2,595 3,116 20.1

Operating Income 4,892 6,181 26.4

EBITDA2) 5,402 6,869 27.2

Net Income 3,925 4,847 23.5

EPS (Rp) 662 817 23.5

FINANCIAL SUMMARY: FY2012 RESULTS

4847

3,9253,6333,3262,524

1,775

0

1,000

2,000

3,000

4,000

5,000

2007 2008 2009 2010 2011 2012

5,4024,9704,7733,867

2,849

6,869

01,0002,0003,0004,0005,0006,0007,000

2007 2008 2009 2010 2011 2012


FINANCIAL SUMMARY: 9M-2013 RESULTS

EBITDA (Rp billion)

NET INCOME (Rp billion)

EBITDA Margin (%) 9M-09 9M-10 9M-11 9M-12 9M-13

32.5% 34.5% 32.8% 34.6% 33.6%

NET INCOME Margin (%)

Description (Rpbn)

9M-2012 9M-2013 Change (%)

Revenue 13,677 17,391 27.2%

Cost of revenue 7,260 9,551 31.5%

Gross profit 6,407 7,840 22.4%

Operating expenses

2,188 2,794 27.7%

Operating income

4,275 5,104 19.4%

Ebitda 4,728 5,838 23.5%

Net Income 3,389 3,906 15.3%

EPS (full amount)

571 659 15,3% 3,906

2,408 2,522 2,7613,389

0500

1,0001,5002,0002,5003,0003,5004,0004,5005,000

9M09 9M10 9M11 9M2012 9M2013

9M-09 9M-10 9M-11 9M-12 9M-13

23.1% 24.5% 23.8% 24.8% 22.5%

5,8384,728

3,8053,5463,379

01,0002,0003,0004,0005,0006,0007,000

9M09 9M10 9M11 9M12 9M13

Ratio (%) Formula 9M 2012

9M 2013

Ebitda margin Ebitda / Revenue 34.6 33.6

Interest coverage (x) Ebitda / Interest expense

262.5 25.15

Cost ratio [COGS + Opex] / Revenue 69.1 71.0

Total debt to equity *) Total debt / Total equity

16.7 20.3

Total debt to asset *) Total debt / Total asset

12.1 14.5

*) Total debt calculated from interest bearing debt


Cash balance (IDR bn) Total debt (IDR bn)

2,6503,905 3,3173,6823,846

5,283

2008 2009 2010 2011 2012 9M2013

4,0123,850

251 199 686

1,871

2008 2009 2010 2011 2012 9M2013

* Include short term investment

Debt/EBITDA Return on Assets

0.06x

2.00x

0.35x

0.04x0.14x

0.56x

2008 2009 2010 2011 2012

The projected adjusted debt/EBITDA of 2.0x to maintain rating level from Moody’s Investors Service.

18.2%24.0%

25.8%23.5% 20.1%

2008 2009 2010 2011 2012

18

STRONG BALANCE SHEET AND RETURNS


50% 50% 55% 50% 45%50%

2007 2008 2009 2010 2011 2012

Average: 50%

SMGR DIVIDEND PAY OUT RATIO IN THE LAST 6 YEARS

REGULAR DIVIDENDS Key determinants of

dividend policy: •Historical dividend payout

trends •Comparison with peers •Projected cash-flows

available for dividends (after taking into account potential expansionary capex etc)

•Analyst and investor expectations

REGULAR DIVIDEND PAYMENTS WITH ATTRACTIVE YIELD

887,7 1261,7

1829,5 1816,7 1962,7 2181,3

0,0

500,0

1000,0

1500,0

2000,0

2500,0

2007 2008 2009 2010 2011 2012

Total Dividen Pay Out

total dividen (IDR billion)


STRATEGIC PROJECTS SMGR Corporate Presentation

FEBRUARY 2014


SMGR

THE OVERALL STRATEGY COMBINES

6 CRITICAL ELEMENTS

1. Undertake Capacity Growth 2. Manage Energy Security 3. Enhance Company Image 4. Move Closer To The Customer 5. Enable Corporate Growth 6. Manage Key Risks

SMGR LONG TERM STRATEGIC FOCUS


Tuban’s view

Pyroprocessing Tonasa V

Jetty Extension Area

Tuban Tonasa

Tonasa

ESP Power Plant These strategic projects will ensure sustainability of

the Company’s market leadership

Preheater Tuban IV

Raw Mill Dept. Tonasa V

New Plants Location

Capacity (mn tons)

Investment (US$ mn)

Construction

Start Completed

Indarung VI-SumBar 3.0 352 2013 Q4-2015

Rembang-Java 2 3.0 403 2013 Q2-2016

TOTAL CAPEX 6.0 755

CEMENT PLANTS PROJECTS


17.1 18 19 19 20.225.3

30 31.8 33.339.3 40.8

2007 2008 2009 2010 2011 2012 2013 2014F 2015F 2016F 2017F

Installed Capacity

INSTALLED CAPACITY (Mio Ton)


CONCLUSION: WHY SMGR? SMGR Corporate Presentation

FEBRUARY 2014

24


Outstanding performance

Experienced management

team

Conservative capital

structure and financial policies

Robust cash flow generation

Outstanding business

performance

Favorable industry outlook

Outstanding business performance – Leading cement player in Indonesia with over 44% market share based on

sales volume for 1M2014 and approximately 42% share of total installed cement capacity (Source: Indonesia Cement Association (“ASI”))

– Strategically plants location is close to key markets throughout the country – As of Dec 2012, acquired Thang Long Cement Company, Vietnam by 70%

share with installed capacity 2.3 mio tons per annum – Substantial growth opportunities through expansion and optimization – Superior distribution network and strong brands recognition – Long-term access to raw materials for cement production and coal for fuel

consumption – Concerns on environmental and Corporate Social Responsibility programs to

ensure sustainable growth.

Favourable industry outlook – Cement consumption pretty much in-line with Indonesian economic growth – Real estate and infrastructure projects and declining interest rates key

demand drivers – High barriers to entry (plant, distribution and brand investment costs) – Disciplined investment on supply side

Robust cash flow generation – Historically strong revenue, margin and price trends – High plant utilization and strong focus on cost and revenue management

Conservative capital structure and financial policies – [Investment grade-like credit metrics] – Conservative capital structure policy; low use of leverage – Access to capital markets for expansion initiatives

Experienced management team – Experienced and successful management team

Strengths of SMGR

SMGR’s COMPARATIVE & COMPETITIVE ADVANTAGE DRIVES SMGR TO BE THE MARKET LEADER IN INDONESIA

Together We Build a Better Future 26 26

Main Office: Semen Gresik Tower

Jln. Veteran Gresik 61122 – Indonesia

Phone: (62-31) 3981731 -2, 3981745 Fax: (62-31) 3983209, 3972264

Jakarta Office: The East Building, 18th Floor, Jln. DR. Ide Anak Agung Gde Agung Kav. E3.2 No.1, Mega Kuningan, Jakarta 12950 – Indonesia Phone : (62-21) 5261174 – 5 Fax : (62-21) 5261176

www.semenindonesia.com

THANK YOU IMPORTANT NOTICE

THIS PRESENTATION IS NOT AND DOES NOT CONSTITUTE OR FORM PART OF, AND IS NOT MADE IN CONNECTION WITH, ANY OFFER FOR SALE OR SUBSCRIPTION OF OR SOLICITATION, RECOMMENDATION OR INVITATION OF ANY OFFER TO BUY OR SUBSCRIBE FOR ANY SECURITIES NOR SHALL IT OR ANY PART OF IT FORM THE BASIS OF OR BE RELIED ON IN CONNECTION WITH ANY CONTRACT, COMMITMENT OR INVESTMENT DECISION WHATSOEVER. THE SLIDES USED IN THIS PRESENTATION ARE STRICTLY CONFIDENTIAL AND HAVE BEEN PREPARED AS A SUPPORT FOR ORAL DISCUSSIONS ONLY. THE INFORMATION CONTAINED IN THIS PRESENTATION IS BEING PRESENTED TO YOU SOLELY FOR YOUR INFORMATION AND MAY NOT BE REPRODUCED OR REDISTRIBUTED TO ANY OTHER PERSON, IN WHOLE OR IN PART. This presentation includes forward-looking statements, which are based on current expectations and forecast about future events. Such statements involve known / unknown risks uncertainties and other factors, which could cause actual results to differ materially from historical results or those anticipated. Such factors include, among others: ● economic, social and political conditions in Indonesia, and the impact such conditions have on construction and infrastructure spending in Indonesia; ● the effects of competition; ● the effects of changes in laws, regulations, taxation or accounting standards or practices; ● acquisitions, divestitures and various business opportunities that we may pursue; ● changes or volatility in inflation, interest rates and foreign exchange rates; ● accidents, natural disasters or outbreaks of infectious diseases, such as avian influenza, in our markets; ● labor unrest or other similar situations; and ● the outcome of pending or threatened litigation. We can give no assurance that our expectations will be attained.

DISCLAIMER The information contained in this report has been taken from sources which we deem reliable. However, none of PT Semen Indonesia (Persero) Tbk and/or its affiliated companies and/or their respective employees and/or agents make any representation or warranty (express or implied) or accepts any responsibility or liability as to, or in relation to, the accuracy or completeness of the information and opinions contained in this report or as to any information contained in this report or any other such information or opinions remaining unchanged after the issue thereof. We expressly disclaim any responsibility or liability (express or implied) of PT Semen Indonesia (Persero) Tbk, its affiliated companies and their respective employees and agents whatsoever and howsoever arising (including, without limitation for any claim, proceedings, action, suits, losses, expenses, damages or costs) which may be brought against or suffered by any person as a result of acting in reliance upon the whole or any part of the contents of this report and neither PT Semen Indonesia (Persero) Tbk, its affiliated companies or their respective employees or agents accepts liability for any errors, omission or mis-statements, negligent or otherwise, in the report and any liability in respect of the report or any inaccuracy therein or omission therefrom which might otherwise arise is hereby expresses disclaimed.

Smgr corp presentation feb 2014

Business

Transcript of Smgr corp presentation feb 2014